The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, read with the Foreign Exchange Management (Non-Debt Instruments) Amendment Rules, 2026, has dismantled the long-standing foreign direct investment (FDI) cap and enabled overseas investors to establish wholly owned Indian insurers under the automatic route. The response from global players has been swift. The Insurance Regulatory and Development Authority of India (Irdai) has already granted registration to Prudential Plc’s HCL Prudential Health Insurance, while QBE Holdings has secured approval to hold 100 per cent equity in its Indian general insurance arm.

Yet, as with any reform of this scale, the real test lies in its implementation. The roster of early movers signals a strong appetite among global insurers. For existing joint ventures, the reforms open the door to buyouts of Indian partners, though such transactions will require careful attention to shareholders’ agreements, pre-emption rights, tag-along and drag-along provisions, and potential valuation disputes. Registration of a new insurer currently takes anywhere between 12 and 15 months. Introducing a quicker approval process and an outer timeline for completing registrations and approving transfers or amalgamations would bring welcome predictability for investors and policyholders alike. Similarly, constituting dedicated committees to review new applications will help prevent bottlenecks as entry volumes rise.

This article was originally published in Business Standard on 12 July 2026 Written by: Shailaja Lall, Partner. Click here for original article

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